Regulation of Foreign Aid in Selected Countries

Executive Summary

Foreign development assistance has played a significant role in the history of both the United States and Europe. International cooperation in this area surged following World War II and has resulted in the adoption of the Millennium Development Goals (MDGs) that set economic, environmental, and welfare objectives for the promotion of world development.

A 1970 UN General Assembly Resolution included 0.7% of countries’ GNI as a target for official development assistance (ODA). Among the countries surveyed, European and Nordic countries tended to proportionally donate more than other regions surveyed.

Australia, India, Israel, Japan, Kuwait, South Korea, New Zealand, the Russian Federation, and South Africa were found to have directed large proportions of their ODA activities toward neighboring countries or those in their geographic region. Former colonizing powers, such as France, apparently favor assistance to their former colonies; countries that still have overseas territories, such as the UK, give priority assistance to these areas.

Countries surveyed usually directed their ODA based on particular substantive areas of focus, such as elimination of poverty, health, education, food security, good governance, etc. Finland, Norway, and Sweden, were found to have given special attention to gender equality; similarly, Israel demonstrates contribution to rural-area training programs specifically for women. The promotion of the rights of the child was another area that influenced the aid policies of the EU, Finland, and Israel. Other criteria for prioritization applied in Australia, Finland, Sweden, the UK, and the EU were found to include levels of poverty as well as the aid’s potential effectiveness.

In addition to other policy considerations for selection of recipients Australia, Finland, and Japan considered potential peace building and national security; Brazil and Israel the development of diplomatic relations, and France the facilitation and management of migratory flows.

Australia, Brazil, France, Germany, Japan, Norway, and the UK implement ODA policies through agencies that are dedicated to ODA distribution. Finland, New Zealand, and Israel have special departments within their Ministries of Foreign Affairs (MFAs) that implement ODA. In South Korea, some aspects of ODA planning and implementation are shared between the MFA and the Ministry of Strategy and Finance. Kuwait and Saudi Arabia conduct their international development assistance mainly through public institutions governed by boards of directors. ODA implementation was found to be fragmented in the Russian Federation, South Africa, and India, with some institutional changes expected in these countries in the future.

ODA implementation was found to be still lacking with regard to the untying of aid in countries such as Germany and the Russian Federation. Restrictions on aid qualifying for dual use and prohibitions on exports in violation of military embargoes were imposed in countries like Finland, France, Israel, and the United Kingdom. All countries surveyed appear to employ at least one oversight mechanism to ensure proper implementation of their ODA policies.

Whereas Australia, Germany, France, New Zealand and Sweden designate ODA as an independent budget allocation, in the UK, Finland, Israel, the Russian Federation, and India, ODA derives from general allocations to ODA dispensing agencies. Kuwait and Saudi Arabia generally channel their ODA through special funds that are governed by boards of directors. Japan and South Korea combine ODA with other financial resources. In general, annual EU budgets are based on a multiannual financial framework (MFF) that is agreed upon by the European Parliament, Council, and Commission in an inter­institutional agreement.

The United Kingdom was by far the largest donor of private donations for foreign aid purposes, followed by Sweden, Finland, Germany, and France. Additional types of foreign development assistance provided by the countries surveyed include emergency aid, scholarships to foreign students, guest worker programs, facilitation of remittances, and debt relief. Further aid-related activities include a focus on trade-enabling policies by Australia, and the creation of incentives for companies to invest in research, development, and production capacity for new vaccines in the United Kingdom.